Rauner budget would take millions from local governments

Thursday

Feb 19, 2015 at 7:46 PMFeb 19, 2015 at 8:35 PM

Local municipalities could lose up to 20 percent of their annual budgets if Gov. Bruce Rauner's proposed cuts become reality.

Rauner said he wants to reduce the Local Government Distributive Fund of the state income tax from 8 percent to 4 percent, or from around $1.2 billion to $634 million. Local government leaders said this would be a very serious blow to their funding.

Springfield Mayor Mike Houston said if Rauner's cuts are implemented, the city would lose $3.8 million in the fiscal year beginning March 1 and $5.8 million the following year, or roughly five percent of the city's general fund.

"It's certainly not something I would support given its impact on not only the city of Springfield but local governments across the state," Houston said.

Springfield Budget Director Bill McCarty said he would be especially concerned if the cuts were to last more than one year. He said Springfield could probably survive a one-year reduction, but anything after that could be devastating.

"You may get through one year — and we could given our fund balance — but it would essentially erase all that we worked for over the last four years," McCarty said. "All of the hard work that we've put in to return fiscal stability to the corporate fund could be undone in one fell swoop."

Houston said he did not want to consider raising taxes as a way to battle the loss. Springfield has not raised its property tax rate since 1984.

In his budget speech, Rauner said the reduction would only account for three percent of local municipalities' budgets. But Illinois Municipal League legislative director Joe McCoy said every community would feel the pain, but smaller communities might fare worse.

"If a community doesn't have a very vibrant array of other taxes that they can generate revenue from, then (the Local Government Distributive Fund) becomes that much more important," McCoy said. "So I think it is a community-by-community issue, and there are a lot of communities that rely much more heavily on LGDF, and those would feel the most impact."

He said some communities with smaller tax bases and no businesses rely on the fund for 15 percent to 20 percent of their budgets.

The likely outcome, according to several mayors, is the reduction of public safety personnel. Houston said if Rauner's decrease passes, the city would have to look at laying off personnel, likely in public safety, which takes up 70 percent of the $118 million total budget.

Jacksonville Mayor Andy Ezard, whose city would lose $962,000 under Rauner's plan, said public safety, pension funding and capital improvements would be the likeliest candidates for reductions in his city.

Chatham Village President Tom Gray said the village, which would lose $569,000 of its $24 million budget under Rauner's plan, would have to cut police funding as well, including potentially laying off officers.

"We would do everything we could to avoid that, but that's the kind of impact it would have on most municipalities across the state," Gray said. "From what I understand, police and fire are what's impacted by this."

Lincoln Mayor Keith Snyder said the impact on his city would be even worse: Lincoln would lose $718,000, or roughly 12 percent of its $6 million budget.

Springfield's McCarty also said, contrary to what the governor might think, cities have already been tightening their budgets since the recession that ended in 2009.

"Nobody was unscathed by the recession," McCarty said. "It isn't like cities are out there wasting their dollars. It isn't like cities haven't been doing anything to deal with the consequences of the recession."

But despite the potential massive cutbacks, most were cautious in their assessments of the plan. McCoy said the cuts are likely just a way of setting the table for negotiations, and he figured the Illinois Municipal League would have several meetings with Rauner as he attempts to finalize a deal.

Houston said he would wait and see the final numbers. Snyder said he knows there are going to be tough choices, and he wants to be part of the process. Ezard said he was not worried because it was simply a proposed budget, and there will be multiple rounds of negotiations between Rauner and the legislature.

"He's making some tough calls, but I think there's going to be some middle ground," the Jacksonville mayor said. "We're convinced our voices are going to be heard."

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